Jan plans to invest $7500, part at 4% simple interest and the rest at 5% simple interest.

Question

Jan plans to invest $7500, part at 4% simple interest and the rest at 5% simple interest. What is the most that he can invest at 4% and still be guaranteed at least $325 per year?

Answer 1

Let x = the amount of money invests at 4%. Then the amount of money he invests at 5% is $7500 - x. That means Jan will make 0.04x in interest from the 4% investment and 0.05(7500 - x) in interest from the 5% investment. Those two amounts together need to be at least $325. So, we can set up an equation:

 

0.04x + 0.05(7500-x) ≥ 325

0.04x + 375 - 0.05x ≥ 325

-0.01x ≥ -50

x ≤ 5000

 

Jan can invest at most $5,000 in the 4% account.